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Sharing Protected Information with Potential Litigation Funders By Todd Presnell
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he battle rages on. As litigation financiers increasingly supply monetary ammunition to fund the prosecution of plaintiff companies’ claims, defendants return fire by seeking disclosure of information shared with the potential litigation funder. The central issue is whether disclosure of privileged communications or work-product to a third-party litigation financing firm waives these protections. The answer invokes the differing waiver analyses of the privilege and work-product doctrine, and application of the common interest doctrine. The attorney-client privilege protects confidential communications between lawyer and client so that the lawyer may supply legal advice. With some exceptions, disclosure of lawyer-client communications to a third party negates the confidentiality requirement and waives the privilege. Most courts have ruled that disclosing privileged communications to a litigationfunding firm prior to the firm’s engagement waives the privilege. Todd Presnell is a The work-product doctrine is not a partner at Bradley. He is a trial lawyer, and privilege, but generally protects from dishas served as lead covery a party or her lawyer’s documents counsel in federal and created because of impending litigation. state courts, argued The doctrine’s waiver standards are narbefore the Sixth, rower than waiver principles associated Seventh, and Tenth Circuit Courts of Apwith the attorney-client privilege. Workpeals, the Tennessee product waiver occurs when disclosure Court of Appeals, substantially increases the possibility and briefed cases for the party’s adversary to obtain the before the United information. States Supreme Court and the Tennessee Courts have issued mixed opinions as Supreme Court. He is to whether a party waives its protections a recognized expert in by disclosing work-product material to the area of evidentiary a litigation-financing firm prior to the privileges. firm’s engagement. The majority view is tpresnell@bradley. com that a party does not waive work-product
protections by supplying information to a putative financier, especially where there is a non-disclosure agreement. In Viamedia, Inc. v. Comcast Corp. (N.D. Ill. June 30, 2017), the court rejected a defendant’s waiver argument in part because the non-disclosure agreement made it less likely that the information would fall into an adversary’s possession. Not all courts agree with this analysis. In Acceleration Bay LLC v. Activision Blizzard, Inc., D. Del. Feb. 9, 2018, the court rejected the work-product doctrine because the party created the materials “with a primary purpose of obtaining a loan, as opposed to aiding in possible future litigation,” and because the work-product doctrine does not apply to documents prepared for a nonparty to litigation, “even if the nonparty is a party to closely related litigation.” The common interest doctrine is not an independent privilege. It is a non-waiver doctrine that permits parties with a common legal interest to share otherwise protected information. Courts, like the Acceleration Bay court, find that a party and putative financier have no common legal interest in litigation prior to entering into a litigation-funding contract. While this doctrine may protect information, including privileged information, shared postcontract, it may be of little help in protecting information shared pre-contract. In sum, the battle continues amid some uncertainty. While not a universal truth, the work-product doctrine provides the most protection for information shared pre-contract, especially where the parties enter a nondisclosure agreement. Sharing lawyer-client communications pre-contract likely waives the privilege, but sharing them under a postcontract common interest agreement may afford greater protection. ■